THE
ENTREPRENEURIAL ADVANTAGE
- Profit
whilst others Wither and Perish -
1 OVERVIEW
How to, profit from innovation whilst others wither and perish.
Professional service firms differentiate themselves by developing
specialist expertise focused on targeted markets. However,
specialisation can become both the greatest strength and greatest
weakness of a firm caused by clusters of functional specialists
resulting in ‘myopic group think’.
Recent advances in the Theory of Brain Specialisation provide crucial
insights into why some professional service firms experience difficulty
with creative thinking and innovation and struggle to achieve
entrepreneurial advantage.
This briefing explains how peak intellectual and creative thinking can
be achieved through understanding how our unique mix of mental
preferences and avoidances ultimately affect our preferred modes of
thinking. It explains why people gravitate naturally to professions
where they can exercise their preferred modes of thinking and provides
a proven methodology to develop Creative Thinking and Innovation.
The methodology for Creative Thinking and Innovation was pioneered in
management education programs at General Electric designed to meet GE
business needs for innovation in products and services.
2 ENTREPRENEURIAL ADVANTAGE
Creativity Thinking and Innovation can be powerful sources of differentiation to
achieve Entrepreneurial Advantage
for professional service firms.
Creativity Thinking is the process of generating new ideas and methods.
Innovation is the process of transforming ideas into value -
added reality
Entrepreneurship is the process of targeting unmet client needs and
finding new and better ways of meeting them through Creativity and Innovation.
Entrepreneurial Advantage is the ability to “think – the –
unthinkable” and create a highly profitable business venture which meets unmet
client needs.
The firm that is a market leader will have unlocked the
power of creative thinking and innovation to achieve entrepreneurial
advantage.
3 ENTREPRENEURSHIP REQUIRES COURAGEEntrepreneurial
firms will develop new and better ways of delivering what their clients
want and in doing so create competitive advantage. This requires:
- Passion for improving client satisfaction by adopting new and better ways to anticipate and meet their needs.
- Looking beyond traditional client expectations for professional services
- Persistence with creative solutions especially when the going gets tough
- Daring to be deliberately different
In the final analysis it is really about having courage in your convictions and seizing the opportunity.
4 THE RISK OF UNDERESTIMATING THE RATE OF INNOVATIONUnderestimating the rate of innovation seems to be a common failure, even for those who are at the forefront of driving it.
“Heavier- than – air flying machines are impossible”
President of the Royal Society 1895
“Everything that can be invented has been invented”
Charles Durel, Commissioner, US Office of Patents 1899
“I think there is a world market for maybe five computers”
Chairman, IBM 1943
“Computers in the future will weigh no more than 1.5 tons”
Popular Mechanics 1949
“Groups with guitars are on the way out”
Decca Records turning down the Beatles, 1962
“640K ought to be enough for anybody”
Bill Gates, Microsoft 1984
We have observed a strategic shift by leading professional service
firms to become more innovative in meeting their client’s needs. The
driver appears to be recognition that client expectations and freedom
of choice demands new ideas and methods of meeting their needs.
Monitoring and understanding this change has become our prime area of
interest as firms develop new ideas and methods for:
- Business models – the way of doing business
- Collaboration and Networking – the strength of business relationships
- Core and Support Business Processes – efficiency and effectiveness
- Service Design and Delivery – value for money
- Interfaces with the client – differentiating the client experience
5 WHAT
DO CLIENTS WANT?
Lucinda Schmidt
reported in BRW 3 March 2005 on the BRW – St George Client Choice
Awards, that what clients actually want is:
-
“Solutions and resolution, rather than
statements of possibilities. They want professionals to take a view (but to
respect the clients right to choose)
- To feel important and respected. They want
professionals to be responsive and to develop a good relationship
- Commercial acumen. They want professionals
to take time to understand their business and their specific needs
- Fee management. They want professionals to
act responsibly with their money and to build trust by suggesting ways to
reduce their fees.”
6 THE CHALLENGE TO BECOME MORE INNOVATIVE
Professional service firms generally promote their creative problem
solving capability to provide innovative solutions for clients.
However, the rhetoric does not often match the reality as highlighted
in Lucinda
Schmidt’s article:
“All professions need to do
better on innovation. This was the attribute that clients said they were most
disappointed with, especially from accounting firms.”
We believe that
root cause of this lack of creativity and innovation is that professional
academic courses place much more emphasis on developing strong logical
analytical skills than developing creativity which is considered the province
of the Arts faculties. This lack of balance, between the logical and the
creative, explains much of the rigidity and myopic vision evident in
professional service firms where new ideas and methods are often actively
discouraged.
“As far as adoption of new
ideas – our board is deeply rooted in the 19th
century, and believe
that Queen Victoria is alive – I am sure that some of them are active
members
of the flat earth society”
Anonymous
Creativity can be
encouraged by giving people the opportunity to express their intuitive thoughts
and feelings on sensitive issues. This will lead to results which will be quite
different to conclusions reached by logical analysis alone.
The ability to
unleash a firm’s creative ability requires practice leaders who are willing to
work outside their comfort zones as they challenge this rigidity and adopt new
ideas and methods.
7 THE LEADERSHIP
ROLE IN SPONSORING CREATIVITY AND INNOVATION
The leadership imperative
is to make creativity and innovation a cornerstone of business strategy. It is
really about sponsoring creative thinking within a disciplined business process
focused on the bottom line by:
- A compelling Vision linking Creativity to Strategy
- Enthusiasm
to embrace new ideas and methods
- Providing
Resources, Encouragement and Support
We cannot
emphasize enough the critical need to Walk – the – Talk.
A professional services firm
was experiencing difficulty in retaining young associates. The young
professionals looked with cynicism at the firm’s Mission
statement which said in part:
“We
will deliver outstanding value – added innovative services to our clients
We
sponsor professional growth and provide fulfilling careers for our people”
Unfortunately the Rhetoric
did not match the Reality of partner behavior!
We believe that a
series of initiatives focused around the following four areas are vital for
Professional Service firms that desire to become more creative and innovative
Leadership – to enhance relationships with clients, colleagues
and staff
Culture – to create a high performance client – centric firm
Strategy – to achieve profitable growth by increasing market share
Differentiation – to create sustainable competitive advantage
8 WHOLE
BRAINED THINKING
8.1 THEORIES OF BRAIN SPECIALISATION AND MANGEMENT
Whole brained
thinking research provides an understanding of how some professions struggle to
be more creative and innovative.
Dr Roger Sperry
who won the Nobel Prize in 1981 for his Left Brain – Right Brained research
proved that the Left and Right hemispheres of the brain are specialized. He
observed that;
“Each hemisphere of the divided brain seems to have its
own separate and private sensations; its own impulses to act. The main
theme to emerge …. Is that there appear to be two modes of thinking,
verbal and non verbal, represented rater separately in left and right
hemispheres, respectively, and that our education system, as well as
science in general, tends to neglect the non-verbal form of intellect.”
The vital connection
between brain specialization and different styles of management
thinking was provided by a professor of Management at McGill
University, Henry Mintzberg who asked the penetrating
questions;
- “Why are some people so smart and dull at
the same time?
- How can they be so capable of mastering certain mental activities and at the same time be so incapable of mastering others?
- Why is it that some of the most creative
thinkers cannot comprehend a balance sheet, and some accountants have no sense
of product design?
- Why do some brilliant management
scientists have no ability to handle organizational politics, while some of the
most politically adept individuals cannot seem to understand the simplest
elements of management science? ”
Planning
on the Left, and Managing on the Right
Henry Mintzberg
Harvard
Business Review June 1976
8.2 NED
HERRMANN’S WHOLE BRAIN MODEL
Ned Herrmann
evolved his four - quadrant model for whole brained thinking whilst he was head
of management education at GE’s Management Development Institute. His model was
an innovative synthesis of Sperry’s research and the Triune Brain Model
developed by Paul MacLean in the 1970’s which was based on human evolution and
highlighted the importance of the limbic system.
Ned Herrmann’s
Organizing Principal for the Whole Brained Model is four interconnected
clusters of specialized mental processing modes, that function together
simultaneously and iteratively, making up a whole brain in which one or more
parts become naturally dominant.
Ned Herrmann
developed the Herrmann Brain Dominance
Instrument (HBDI) in 1978 as a metaphoric model to emulate the specialized
structure of the brain to and provide quantification of an individual’s
relative preferences for specialized thinking.
The degree of dominance becomes evident from the mental preferences
indicated by the HBDI.
HERMMANN’S FOUR QUADRANTS
AND THINKING PREFERENCES
|
A – UPPER LEFT CEREBAL
ANALYSER
Logical
Analytical
Fact – Based
Quantitative
RATIONAL SELF
|
UPPER RIGHT CEREBAL- D
VISUALISER
Holistic
Intuitive
Integrating
Synthesizing
EXPERIMENTAL SELF
|
B – LOWER LEFT LIMBIC
ORGANISER
Organised
Sequential
Planned
Detailed
SAFEKEEPING SELF
|
LOWER RIGHT LIMBIC - C
PERSONALISE
Personalise
Interpersonal
Feeling – Based
Kinesthetic
Emotional
FEELING SELF
|
The preference
for Rational Thinking or Creative Thinking explains a person’s preference for
career choices and acquisition of competencies.
8.3 BRAIN
PREFERENCES OF TYPICAL PROFESSIONSs
|
A
Lawyers
Actuaries
Research
|
D
Architects
Entrepreneurs
Marketing
|
|
B
Engineers
Accountants
Administrators
|
C
Counselors
Social Workers
Sales
|
9 APPLICATION
OF WHOLE BRAINED THINKING
9.1 A POWERFUL ORGANISAIONAL DIAGNOSTIC
The application
of the HBDI can provide an excellent diagnostic tool to Map the Firm’s Thinking
Preferences and highlight both Strengths and potential Weaknesses.
The challenge for
professional service firms with strong A & B quadrant preferences for
Logical and Structured thinking is to encourage more entrepreneurial creative
thinking by including C&D quadrant input.
The need for innovation
became apparent to a firm that had experienced considerable business success
with a suite of services. However, with the passage of time these services were
no longer relevant to their client needs and the firm experienced a dramatic
downturn in profitability.
My first gut reaction was
that the firm was using the past as its point of reference. Not surprisingly, mapping
the firms Thinking Preferences with the HBDI showed very strong clusters in the
A and B quadrants and low scores in the C and D quadrants.
The learning outcome was
that for A and B quadrant firms there is considerable risk of complacency based
on past success and that services must be continually innovated to be relevant
to changing client needs.
The corresponding challenge for professional services with a strong C
& D quadrant preference for Intuitive and Interpersonal thinking is
to encourage more Logical and Structured thinking.
A consulting firm had
achieved spectacular revenue growth. However, it was losing money because of
poor – and in some cases non-existent – business processes. Costs could not be
allocated to projects and there was no reconciliation between Quotation and
Cost of Delivery.
Mapping the firm with the
HBDI highlighted the predominance of D quadrant professionals and the need for
Business Process Management.
Lack of Business Process
Management is often the Achilles heal of entrepreneurial organizations where
growth has outstripped the organizations management systems
9.2 A CATALYST FOR CULTURAL CHANGE
Our thinking preferences govern the way we approach problem solving by
using our preferred functions and avoiding our least preferred
functions. Avoidance of our least preferred functions sub-optimises the
decision making process.
Professions with strong A and B quadrant preferences will normally
solve problems entirely in a left brained rational mode. However, their
preferred solution will be very close to the status quo and at best
will only represent an incremental change. The right brain (especially
the D quadrant) is the only part of our brain that deals effectively
with change.
Also people with strong A and B quadrant preferences will not recognize
the importance of factoring human emotions and feelings into the
solution.
The whole brained decision making process ensures that blind spots are
avoided. This highlights the advantages of Whole Brained
Cross-functional Problem Solving Teams which are effective in:
- Breaking down traditional functional boundaries
- Solving complex business problems
- Developing a teamwork culture and
- Generating innovative solutions.
WHOLE BRAINED DECISION MAKING
PROCESS
|
A – Step 1 Preparation
Information Gathering and Analysis
of Facts
Objective – To Define the problem
|
Step 2 Generate Ideas – D
The process of Incubation Visualisation and Illumination
Objective – To Brainstorm alternate Solutions
|
|
B – Step 3 Reality Check
Involving Detailed Review
Objective – To Stress Test
Solution
|
Step 4 Validation
– C
Consider Personal
and Interpersonal Issues
|
10.1 DESIGNING THE NECESSARY BEHAVIORAL SHIFT
A relatively small behavioral shift in situational functioning – towards increased use of C
and D quadrants – will be a catalyst for cultural change towards a more future – orientated entrepreneurial firm.
| FROM
A&B |
TO MORE C&D |
| QUADRANT BEHAVIOR |
QUADRANT BEHAVIOR |
From constrained
|
to more experimental |
From bureaucratic
|
to more flexible and free |
| From closed to new ideas |
to more open to new ideas |
| From inward looking |
to more visionary |
| From authoritarian management |
to more collaborative management |
From supervision
|
to leadership |
| From impersonal |
to humanistic |
| From precedent – based |
to future – orientated |
| From business planning |
to strategic planning |
| From rules and regulations |
to trust
|
In designing the
shift from A&B quadrant to more C&D quadrant behaviors it is
important not to ignore the organizational strengths that A&B
quadrants have given
the firm.
- Attention to facts and figures
- Detailed plans and schedules
- Accurate financial reporting
- Impeccable financial management
- Attention to legal issues
- Detailed administrative systems
- Standard Operating Procedures
- Quality Management Systems
The best approach is to define the firm’s Strengths and Weakness
through a SWOT Analysis which also looks at the Opportunities for
Innovation and Weaknesses of the Status
Quo. This provides a Gap Analysis as a basis to design the required
behavioral shift to become more entrepreneurial.
10.2 INNOVATION
IN DESIGNING THE CLIENT EXPERIENCE
Innovation in designing the client experience should be viewed from
the perspective of the client – “how will it add value for me?”
Focus innovation where new ideas and methods will have the greatest
impact on the interface with the client to enhance the Client
Experience.
- Knowledge Centered Leadership
- Relationship Centered Leadership
- Business Process Management
- Teamwork and Collaborative Management
10.3 BECOMING
A MARKET LEADER
The firm that
dominates its targeted market is:
- The most creative and innovative in
designing the client experience
- Consistently more entrepreneurial in
marketing than its competitors
- More efficient and effective in service
design and delivery
- Legally and financially impeccable
This strategic
shift is achieved by focusing on four key areas.
Leadership – to enhance relationships with clients, colleagues
and staff
Culture – to create a high performance client – centric firm
Strategy – to achieve profitable growth by increasing market share
Differentiation – to create sustainable competitive advantage
The firm that is a
market leader will have unlocked the power of whole brained thinking in these
four areas to achieve the entrepreneurial advantage.
ABOUT THE AUTHORS
Bede Boyle A.F.A.I.M.
– Principal Louern Consulting
Louern specialises in assisting professional service
firms deliver outstanding results through innovative business development
programs which focus in achieving dramatic and profitable growth in B2B sales.
Bede is sought
after as a corporate advisor and consultant to industry, government and
professional service firms. He has over a decade of experience as a director of
professional service firms whose clients included BHP, BHP Billiton, Coca –
Cola Amitil, Commonwealth Bank, Countrylink, Dairy Farmers, Freightcorp, GM
Holden, Newcastle Port Corporation, Powercoal, Rio Tinto, State Rail, QANTAS,
Vodaphone and Zurich Insurance.
Bede was Chairman
of Bywater McLean Pty Limited through to successful sale to Axon Group plc. He
is a Director of Pacrim Environmental Pty Limited.
Bede is qualified
to administer the Herrmann Brain Dominance Instrument and the Myers-Briggs Type
Indicator which he uses to map organization Strengths and Weaknesses as part of
a diagnostic process.
Brad Shields – Principal Louern Consulting
Brad is a successful Business Entrepreneur, experienced Business
Development Manager and powerful Sales Management coach who specialises
in developing customer focused organisations. Following extensive
professional international experience with business enterprises in US,
Canada, Japan and New Zealand, he established Louern in 2000.
Brad adds value in his innovative approaches to marketing, business
development and sales for clients including Movements International,
Bywater McLean, Axon Solutions, Targus, Grace Records Management and
RBM Plastics.
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